Tag Archives: investment

Daily Update, June 29, 2012: Rich leading families, NYT China, South China Sea

Today’s links begin with an exhausting-sounding investigation from a team of Bloomberg reporters into relatives of Chinese Vice President Xi Jinping, who is expected to become the country’s top leader this fall. Sometimes through assumed names, holding companies, and other tactics, many of Xi’s relations have significant business and real estate holdings. [READ THE STORY]

China’s “outward direct investment” (ODI) is a “game changer,” says Columbia University’s Jeffrey Sachs. Peking University’s Yiping Huang adds details:

So China is leveraging its ODI to buy natural resources, acquire strategic assets, and set up companies that will facilitate exports. “The single focus of all these activities is to strengthen and improve the competitiveness of [their] factories at home,” he says.

Huang calls this the “Chinese model” of ODI but says it is hardly unique to China. Other rapidly developing economies, such as Korea and Brazil, are pursuing similar strategies, but those countries’ outside initiatives have been overshadowed by China’s massive capital resources, he says. “The difference between China and Korea is that Korea is a small country,” Huang says. [FULL STORY]

There might be a big, non-resource investment coming up: China Development Bank is looking at a $1.7 billion tie-up with a San Francisco real estate developer.

The South China Sea is still keeping things interesting.

  • Philippine officials said their planes spotted Chinese fishing ships back in the area surrounding the disputed Scarborough Shoal on Monday.
  • On Wednesday, a new spat between China and Vietnam over oil exploration in the disputed Paracel Islands added to the recent bilateral dust-up that has seen Vietnam passing a law supporting its claim to the islands and China upgrading the administrative status of three of the islands.

    China National Offshore Oil Corp. said it was offering a new batch of oil-exploration blocks inside the 200-nautical-mile exclusive economic zone granted to Vietnam under the United Nations’ Law of the Sea.

    Vietnam’s government quickly objected, saying the Chinese state oil firm was moving into its territorial waters. On Wednesday, state-run Vietnam Oil & Gas, or PetroVietnam, weighed in, showing how territorial claims in the sea are increasingly being backed up by powerful companies in addition to rival governments, and potentially adding new sources of tension to the conflict. [FULL STORY]

  • On Thursday, a Chinese Defense Ministry spokesman said China is considering setting up a military unit in “Sansha city,” the newly created prefecture-level body that encompasses three islands also claimed by Vietnam. [China Daily report]
  • The official also said China is sending combat-ready patrols to the Spratly Islands.
  • July 2–10, the United States and the Philippines are planning joint military exercises in the South China Sea.

Speaking at a CSIS conference Wednesday, U.S. Assistant Secretary of State Kurt Campbell said the United States wants to work with China on the South China Sea, according to a press report. From the video: “We will have areas of difference, we will have areas where we compete… we want to build a strong, durable partnership with China that works for everyone” to build peace in Southeast Asia.

Daily Update, June 21, 2012

This is an experiment. In my new position, I need to keep close track of news developments. Perhaps a good way to do this is to build a daily briefing, in the tradition of Bill Bishop’s update at Sinocism or Politico’s morning e-mail, or indeed of this blog’s former practice of posting Del.icio.us links. Only time will tell just how daily this actually is, and here goes a first shot. Of course, this is far from comprehensive.

South China Sea

  • China has raised the status of three island groups from county- to prefecture-level. This raises the level of the Hainan Province administrative body with purported jurisdiction over the Paracels and the Spratlys.
  • “Chinese Vice Foreign Minister Zhang Zhijun summoned Vietnamese Ambassador to China Nguyen Van Tho on Thursday to lodge a solemn representation to the Vietnamese side on passing a national law of the sea.” The law reportedly asserted sovereignty over the islands.
  • A South China Morning Post article considers the potential for the Philippines to bring China to international arbitration or tribunal unilaterally, despite the convention that both parties need to agree to such a resolution.
  • The Philippines will conduct a flyover of the Scarborough Shoal, and its ships will return if foreign vessels are present in the region, President Aquino said.
  • Both the Philippines and China had previously reportedly pulled out their vessels from the area surrounding the Scarborough shoal, a land feature in the South China Sea claimed in various ways by each country. The reason? Supposedly, bad weather.
  • Chinese Defense Minister Liang Guanglie and Singaporean counterpart Ng Eng Hen met on June 18and discussed the South China Sea, among other issues.

Air-Sea Battle Concept

  • U.S. Chief of Naval Operations Adm. Jonathan Greenert spoke on the Air-Sea Battle “concept”/”doctrine” at Brookings May 16. No mention of China, but the opening of the Arctic is noted, as is electronic warfare.

Scientific Collaboration With China

  • A U.S. Congressional committee chairman may or may not have called China “the enemy.” While a colleague questioned White House advisor John Holdren—previously a key figure in the Harvard environmental politics world—House Science Committee Chairman Ralph Hall (R-Tex.) had something to add. “I don’t think you’re gonna get the answer that you expected to get, Mr. Rohrabacher,” Hall said, referring to his colleage. “I too have seen our president bow and scrape to the enemy on many occasions.” The line of questioning was on scientific collaborations with China.

China–U.S. and China–World Investment

  • A Missouri man has been stuck in China over a business dispute for several months, the Associated Press reported. I think Dan Harris of China Law Blog would offer a  forehead-slapping motion over the following: “Because of the unpaid debt to Chinese suppliers, and citing Fleischli’s status as NorthPole’s legal representative in China, a court in Xiamen ordered Fleischli detained. … Fleischli hadn’t even realized he was NorthPole’s legal representative, a role that makes Fleischli the point of contact for the company.” Why you pay attention to business laws.
  • In my first contribution to Fortune Magazine, I explore what’s behind some sizable investments apparently by Chinese individuals in Toledo, Ohio. The article will run in super-short form in the magazine, but this version is more complete.
  • Foreign investment in China may get a bit simpler, reports the Wall Street Journal: “the China Securities Regulatory Commission said it would lower entry requirements and simplify the approval process for applicants under the Qualified Foreign Institutional Investors program, the primary program for foreign investors to enter China’s capital markets. It also will allow qualified foreign investors to hold more shares in domestically listed companies and enter the country’s interbank bond market.”

Daily Translation (another experiment)

  • Beijing has a new bike sharing system, but a long-time Beijing resident with an out-of-town ID has sued the company for discrimination. So far, only Beijing residents with new Beijing IDs can use the system. I translated part of a Caixin story for fun. If you read Chinese, just go read it.

Bank of America and China Construction Bank, or No-Fee USD Withdrawls in China [RIP]

UPDATE [2013-12-07]: Well folks, party’s over. Some months ago BoA sold its stake in CCB, and as I had feared, I’m hearing from friends in Beijing who have used their BoA ATM cards recently that there are indeed now fees. And now, I will close my BoA account, having lost any use for it. -Graham

My personal favorite transpacific investment tie-up is one that made a frustrating and expensive process free, if not easy. Bank of America has an 8.2 percent stake in China Construction Bank (jiàn háng), a major institution that went public in 2005. I don’t claim to understand the implications of this investment between huge banks, but I know one thing: It lets me move USD into RMB with no ATM fees, no exchange rate adjuncts, and generally few headaches.

By way of news, The Financial Times reports that BoA is increasing its stake to more than 10 percent, but I thought it might be useful for readers coming from the United States to China to know about this trick.

Many international travelers are familiar with the pain of double-barrel ATM fees — one from the machine that gives you money, and one from a U.S. bank penalizing you for using someone else’s terminal. Worse yet is the percentage of the withdrawl charged as an “exchange rate adjunct.” Before I discovered the BoA-CCB deal I was losing almost 7 percent on my USD withdrawls in China.

Now, I withdraw money from a BoA checking account with the debit card I received in the United States with no fees whatsoever: It transfers at market rate from USD to RMB and gives me cash.

There was one hurdle, however. Money in my life this year is deposited in Colorado. People in the U.S. needing to pay me send a check to my family, who generously go to the bank to make the deposit. But there are no BoA branches in Colorado.

BoA has one more service that completes my money circuit. Once you associate a U.S. account with a BoA account, incoming transfers from the other bank can be done on a one- or three-day basis with no fees. So if you think I need to be richer in China, I’ll send you the address in Colorado, my family will make a deposit into a locally available bank, I’ll transfer it free to BoA, and CCB ATMs throughout China (and Hong Kong) will allow me to withdraw that money with no charges.